It’s FOMC day, and you know what that means.
Crypto traders are watching closely. Bitcoin and Ethereum could move fast depending on what Fed Chair Jerome Powell says. The market is cautiously optimistic, but history shows that Powell’s tone can trigger big swings – either a rally or a sharp sell-off.
Traders are focused on three main things: interest rates, the labor market, and inflation. Powell’s words on any of these can push crypto prices in minutes.
What Could Be Bullish for Crypto
Crypto tends to rally when the Fed leans dovish. One key sign is a commitment to further rate cuts. If Powell highlights risks in the labor market or weakness in jobs, markets often see it as a green light for risk assets like Bitcoin and Ethereum.
Another positive is a soft tone on inflation. Calling recent price rises “transitory” or the result of one-off events like tariffs suggests the Fed isn’t in a rush to tighten policy.
Traders are also watching for signals of economic support. Comments that the Fed will act “as needed” or a shift toward a neutral policy stance usually encourage buying. Dropping restrictive frameworks is another bullish indicator.
Daan Crypto Trades noted that Powell’s dovish speech at Jackson Hole in August triggered a sharp crypto pump. While those gains have partly retraced, today could see similar volatility if the Fed signals easing.
Bearish Signals Traders Can’t Ignore
On the other hand, crypto could slide if Powell signals caution or a hawkish stance. Mentions of “higher for longer” interest rates or uncertainty about future cuts often lead traders to reduce risk exposure.
Inflation warnings are another red flag. Repeating concerns about rising prices or hinting that the Fed could pause or reverse cuts can trigger sell-offs.
The stakes are high for Bitcoin and Ethereum.
What Traders Are Watching Closely
Traders are parsing GDP forecasts, labor market data, and Powell’s timeline for rate cuts. Weak jobs numbers could boost odds for further easing, while strong economic data might lead to caution.
The market is bracing for sharp moves today and through the week. Recent volatility has set the stage for a delicate balance – Powell needs to support growth without stoking inflation fears.
Here’s the Bottom Line…
Today’s FOMC speech could define Bitcoin and Ethereum’s near-term direction. Dovish hints may push prices higher, while hawkish or unclear guidance could trigger quick sell-offs.
Traders are ready, eyes on Powell, and the market is holding its breath.
